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Realtors: Use us more over tax crackdown

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government has been urged to “make more use” of Bahamian realtors to save time and money on the $7.2m project to make real property tax rolls “unassailable”.

Christine Wallace-Whitfield, the Bahamas Real Estate Association’s (BREA) president, and other realtors told Tribune Business that Association members, firms and the industry’s Multiple Listing System (MLS) already possess much of the sales, appraisal and valuation data that the government is after.

As a result, they are questioning why the Ministry of Finance and Department of Inland Revenue (DIR) intend to spend several million dollars on hiring 40 Bahamians to conduct a New Providence-wide ‘door-to-door’ visitation of more than 100,000 properties to seek-out information that is largely already available.

However, Marlon Johnson, the Ministry of Finance’s acting financial secretary, told this newspaper that the data needed to be collected and compiled through one “consistent” method that met international standards and best practices.

Emphasising that the Government is not under-valuing realtors and their potential contribution to the real property tax crackdown, Mr Johnson said different firms and individuals employed different appraisal and valuation methodologies - something the DIR wanted to avoid.

Instead, he added that the Government was placing its faith in its foreign consultant, Tyler Technologies, pointing out that it had conducted similar exercises in large US cities.

And, responding to social media criticisms about the need for the island-wide assessment, Mr Johnson said developing an accurate, complete tax roll that properly captures property valuations will help eliminate the need for new and/or increased taxes by enabling the Government to maximise existing revenue streams.

His comments came after the Government last week warned all New Providence home and business owners to brace for a visit from “data collectors” some time during the 18 months between June 2019 and year-end 2020 as it bids to expand the real property tax roll by some 30 percent.

Believing that this initiative will more than pay for itself by yielding a minimum $21m in extra annual real property tax revenues, the DIR said its data “collectors” will be taking photographs of all properties and measuring their exterior dimensions.

They will also determine the current property owner’s identity, and seek information including the year the building was built; occupancy type and size of building; number of rooms and type of construction in a bid to update a real property tax register and land registry that was described as “woefully inadequate”.

The project plans to draw on Bahamian realtor knowledge and expertise on the back end, with the DIR and Tyler Technologies intending to validate the data they obtain by comparing it against BREA members’ own sales and valuation figures.

However, BREA’s president said she “absolutely agrees” that the Association and its members already possess much of the information that the DIR/Tyler Technologies are seeking, which could help reduce the time and cost associated with the project.

“We have the Bahamian Multiple Listing System (MLS), which is a great resource for information,” Mrs Wallace-Whitfield told Tribune Business. “That’s where we do a lot of stuff; comparisons on properties, where appraisals ho in, and everybody reaches out to us because of the MLS.

“That way we can see what properties are sold, how long they have been listed. We have very good resources for properties that are listed, bought, sold and rented, both residential and commercial.

“I agree that it’s [the information] right there, readily available and that would also save them money. Wow, they’re going to do that by knocking on everyone’s door? Interesting,” she added.

“There are a lot of people out there that can assist with this. They can reach out to BREA and the appraisal committee on this. That will potentially get the information they’re looking for much faster and more accurately. But it seems as if they have it all set in motion.”

Mike Lightbourn, Coldwell Banker Lightbourn Realty’s president, told Tribune Business he felt that the DIR and revenue collection authorities were failing to make sufficient use of private sector expertise when it came to maximising real property tax and other revenue sources.

Revealing that himself and his firm were frequently contacted about Family Island property valuations, he said: “It’s certainly easier to do that for the Out Islands because there are not so many properties that need to be assessed, as real property tax is only levied on non-Bahamians.

“If someone asks about a lot in Stella Maris or Great Harbour Cay I have agents on the those islands and it’s no trouble for them to say it’s worth ‘x’ thousand dollars. They [the Government] don’t make enough use of us, particularly in the Out Islands, where they don’t have anyone on the ground.

“What I’m trying to say is that there’s a lot of help out there, and as far as I’m concerned they just have to ask for it,” Mr Lightbourn added. “If they have a more efficient and quicker way, that’s fine.”

Mr Johnson, in response to concerns that the 40 hires would lack the necessary skills, said they would be engaged and trained by Tyler Technologies. He added that the consultants would also “train the DIR team up on the entire methodology” used to derive property tax values and assessments.

Pledging that the real estate industry would not be excluded, he said the Government needed “a singular approach to doing this, and recognised Tyler Technologies as an expert in the field that has a methodology down pat”.

“It made sense to go that way,” Mr Johnson added, “knowing they have a methodology and database that will stand up to scrutiny, and is scalable and adjustable as the landscape changes.

“The way they [realtors] compile information, present data is different, but they will be engaged and consulted in the process because the way we confirm market value is based on the prices realtors sell for. We don’t discount their contribution to this exercise at all.”

Mr Johnson admitted the project is “a significant undertaking”, with 18 months “a relatively short time” in which to value just over 100,000 properties on New Providence. “Tyler has done this in large cities in the US,” he added, “and we have confidence that they know what they’re doing and will meet the target timeline.

“We looked at a number of options as to how to approach this. What we wanted is something that meets international standards, global best practices. What we wanted was a robust process that, in due course, compares with all the information the realtors have but the database needs to be sound and have a precise picture of properties - whether they’re occupied or not, up for sale or not.

“This is the optimal way we can have a single database that’s consistent, the information is consistent, the methodology is consistent, and it’s checked against the information the real estate industry has.”

Mr Johnson said that, once the New Providence assessment was completed, the Government plans a Family Islands “roll-out” of the initiative with the Department of Inland Revenue potentially taking the lead and Tyler Technologies playing a supporting role.

He added that the objective was to “make sure we have an unassailable tax roll” by capturing all residential and commercial properties not on it, while ensuring that all valuations were up-to-date - an exercise that has not been conducted for years.

“This exercise had to be done at some point to make sure we were maximising the yield from existing taxes and, equally important, to ensure we have fair assessments of property values,” Mr Johnson told Tribune Business.

“The success of this kind of project in shoring up the existing tax base puts less pressure on the Government to increase taxes or find new taxes. For years we’ve heard the cry that real property tax is not being paid, and a project like this puts the Government in a better position to collect existing taxes and means there’s less pressure to find new revenue streams through increased taxes or new taxes.”

Some estimates place real property tax compliance rates as low as 30-40 percent, with owners taking advantage of numerous system loopholes, poor administration and record-keeping and a culture of poor to non-existent enforcement to evade tax liabilities due to the Government.

The latter’s recent nine-month fiscal “snapshot” showed that real property tax revenues for the period June 2018 to end-March 2019 stood at $93.7m, a slight $4.7m improvement on the sum collected in the prior year, and amounting to 70.9 percent of the full-year $132.2m projection.

The auditor general’s audits of the Government’s annual accounts frequently estimate that unpaid real property tax arrears have piled up to the extent of $500-$600m, and call for efforts to be made to either collect this or write it off.

Comments

Clamshell 5 years, 5 months ago

Earth to Neil Hartnell: Learn how to edit and condense. 💤💤💤💤💤💤💤💤💤

Well_mudda_take_sic 5 years, 5 months ago

Hartnell's head is way out there in the universe, probably being stretched by the event horizon of a super-sized blackhole.

DWW 5 years, 5 months ago

A publicaly accessible property tax database would be invaluable and far reaching implications for the Bahamas. one which i suspect many would oppose. one of the greatest advantages would be to check that you are not being over tax by checking what your neighbors bill is. if one house on park place is billed at $10 while boardwalk is billed at $100 then you know you need to deal with it.

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